ICELAND: ESTIMATES OF SUPPORT TO AGRICULTURE

Contact person: Osamu Kubota

Email: osamu.kubota@oecd.org

Tel : (33-1) 45 24 95 35 Fax :(33-1) 45 24 18 90

DEFINITIONS AND SOURCES

Country Total Support Estimate (TSE) and derived indicators in Table 1 cover all agricultural production, i.e. all agricultural commodities produced in the country. Definitions of basic data sets refer to the specific name of the programmes with specific sources indicated in square brackets. For the Producer Support Estimates (PSE) and Consumer Support Estimates (CSE), the description of policy measures indicates the commodities covered by the measures, as well as the method of allocation of the corresponding transfers among commodities. "MPS commodities", which vary across countries, are those for which market price support is explicitly calculated in Table 2.

Market Price Support (MPS) and Consumer Support Estimates (CSE) by commodity in Table 2 are calculated for the following commodities: milk, beef and veal, pig meat, poultry meat, sheep meat, wool, and eggs. Definitions are provided only for basic data sets from which all the other data sets in this table are derived, following the formula indicated in each commodity table. Specific sources are indicated in square brackets.

Producer Support Estimates (PSE) by commodity in Table 3 are calculated only for commodities produced in the country within a common set of commodities (wheat, maize, barley, oats, rice, sorghum, soybeans, sunflower, rapeseed, sugar, milk, beef and veal, pigmeat, poultry meat, sheep meat, wool, and eggs), provided that the value of production of that commodity exceeds 1 per cent of the total value of production in the country concerned. All data sets in the calculation of PSE by commodity come from Tables 1 and 2 where definitions are included.

Definitions of the indicators, criteria of classification of programmes included, and methods of calculation can be seen in OECD, Methodology for the measurement of support and use in policy evaluation [http://www.oecd.org/agr/policy].

DEFINITIONS AND SOURCES

Table 2. Market Price Support and Consumer Support Estimate by commodity

Definitions:

I. Level of production

Milk: Total production of cow milk delivered to dairies (including production in excess of quota) plus estimated on-farm use, converted from litres to kilos using the coefficient 1.032 kg per litre [1].

Beef and veal: Gross indigenous production of beef and veal, carcass weight, deliveries to slaughterhouses plus on-farm use [2].

Pigmeat: Gross indigenous production of pigmeat, carcass weight [2].

Poultry: Gross indigenous production of poultrymeat, carcass weight, delivered to slaughterhouses [2].

Sheepmeat: Gross indigenous production of sheepmeat, carcass weight, including estimated on-farm consumption [2].

Wool: Greasy equivalent weight of greasy and scoured wool [2].

Eggs: Gross indigenous production of eggs [2].

II. Producer prices

Milk: Average price of milk for feed purposes and milk for human consumption (delivered to dairies and on-farm consumption). The price of milk for human consumption is the administered price net of transportation costs and direct payments. The price of milk for feed purposes is assumed to be 20 per cent lower than the average price of milk for human consumption [1].

Beef and veal: Weighted average price received by farmers, excluding transport costs [3]. Administered price was abolished in 1998.

Pigmeat: Average prices according to reference price lists published by the Pig Producers' Organisation, net of direct payments [2].

Poultry: Estimated producer prices for the period 1986-1987 and administered producer prices for the period 1988-1994. Transportation and processing costs (5 per cent) are deducted [4].

Sheepmeat: Average price of sheepmeat delivered to slaughter houses and on-farm consumption net of direct payments and transportation costs. For sheepmeat in excess of quota, the unit value of deliveries is used [5]. The administered price was abolished in 1998.

Wool: Average price paid to farmers [2]. The administered price was abolished in 1998.

Eggs: Estimated average producer prices for the period 1986-1987 and administered producer prices for the period 1988-1994. Processing costs (15 per cent) are deducted [4].

IV. Level of consumption

Milk: Total domestic use of fresh milk and milk products in milk-equivalent [1].

Beef and veal, pigmeat, poultry, and sheepmeat: Total domestic use of meat, carcass weight [2].

Wool: Consumption of wool is assumed to be equal to production, in greasy equivalent terms [2].

Eggs: Domestic use of eggs [2].

VII. Reference prices

Milk: Farm gate price of milk, calendar year, actual fat content (x%) in New Zealand, plus transport cost for butter and skimmed milk powder in milk equivalent (56kg and 82kg per tonne of milk, respectively) from New Zealand to the United Kingdom (Pnz), adjusted to fat content (y%) in Iceland, the reference price being (Pnz)*[ (x%)+(y%)] /2*(x%) [6].

Beef and veal: EU export price of live animals for slaughter [7], free-at-EU frontier offer price, defined in green ECUs, live-weight converted to carcass equivalent (coefficient 1.85), expressed in ECUs by multiplying this price by the "correction factor" defining the parity of the green ECU to the ECU.

Pigmeat: Farm gate price used in calculating the PSE for the EU implicit reference price calculated by deducting the EU feed adjustment from the EU producer price [7].

Poultry: EU unit value of exports of 70 per cent chickens outside the EU [8]. In order to make reference prices applicable to farm level prices, processing costs are subtracted from reference prices (estimated at 45 per cent of this unit value) [9].

Sheepmeat: EU import price of New Zealand frozen lamb, c.i.f. U.K. [7], killing and processing deducted, and adjusted by a coefficient of 1.3 for the price difference between frozen New Zealand and fresh EU supplies.

Wool: New Zealand producer price adjusted for transportation costs estimated as the ratio of c.i.f./f.o.b. prices (5 per cent) [10].

Eggs: EU export unit value of eggs outside the EU of poultry, fresh or preserved shell eggs, except hatching eggs [8]. In order to make reference prices applicable to farm level prices, processing costs are subtracted from reference prices (estimated at 25 per cent of this unit value [9].

Sources:

[1] Agricultural Production Board and Dairy Association.

[2] Agricultural Production Board.

[3] Prices: Agricultural Production Board; Transport costs: Agricultural Society of Iceland and Agricultural Economic Institute.

[4] Agricultural Production Board. Processing costs are estimated by the Ministry of Agriculture.

[5] Prices: Agricultural Production Board; Transport costs: Agricultural Society and Agricultural Economic Institute.

[6] New Zealand Ministry of Agriculture and Fisheries. Communication to OECD Secretariat.

[7] EU Commission.

[8] EUROSTAT external trade -- exports.

[9] Icelandic Ministry of Agriculture. Communication to OECD Secretariat.

[10] PSE/CSE database -- New Zealand; Statistical Bureau of Iceland for transport costs.